Why I do my Own Maintenance

TLDR: We don’t pay taxes on work we do for ourselves.

I am a software developer and I admit that I don’t enjoy getting my hands dirty, literally. Fixing my bike does not give me any pleasure, other than the satisfaction of completing the job. I only do it of necessity.

Yes, I know that I can pay others to do the job for me. Economic theory is clear that I should indeed get others to do the job for me. Economists tell us that specialization will make us richer. But, as we know, there is a difference between theory and practice, at least in practice. And it turns out, despite me not being an expert with the wrench nor enjoying the greasy work in the garage, it makes economic sense to perform the dirty work myself.

Let’s start by the textbook theory of comparative advantage from economics.

John has the skill to produce 2 pizzas per hour, another skill he has is to make 3 lamps per hour. Richard, on the other hand, is a master pizza maker, and he can make 8 pizzas per hour. He is pretty good at making lamps well. He can make 6 lamps per hour. What would be their best use of time? Clearly Richard is the better of the two at both tasks. Should he divide his time between baking and making lamps?

Economic theory says that each should do what he or she is comparatively best, at and only that. This implies that Richard should spend all his time making pizzas. As for John he is not particularly good at either tasks, but he is relatively better at making lamps than baking. His comparative advantage is making lamps, and the theory says that for him to earn the most, he should devote all his time to making lamps.

For simplicity we assume that one lamp is worth the same as one pizza. We could have made it more general by stating how many dollars worth of service each would create. Be it either pizza, lamp making, or accounting, or even your job. But let’s stick to lamps and pizzas.

In short, the comparative advantage-theory helps us make the choice on what to spend our time on. John should make lamps and Richard make pizzas.

But what if John wants a pizza? He should still make lamps, and trade with Richard for the pizza.

Wouldn’t it be better to spend half of the time on each? Let’s look at the numbers.

In case A where each does their comparative best: Richard makes 8 pizzas and John makes 3 lamps. A total of 11 units per hour. In case B where they each divide the time between the two activities. The output is 8/2 + 2/2 = 5 pizzas, and 6/2 + 3/2 = 4.5 lamps. A total of 5+4.5= 9.5 units Case C where they do the opposite of what they are best at: John makes 2 pizzas and Richard makes 6 lamps = 8 units.

The numbers are clear. Collectively they are the most productive - that is, they make the most output - whenever each does what is their comparative best task. They create most output and most value in case A.

If Richard needs lamps he should not make them himself. He should make pizzas and trade them with John for lamps. If he needs 6 lamps, He will spend 6/8 hour = 45 min to make 6 pizzas and trade them with John, instead of 1 hour to make the 6 lamps himself. Remember that one lamp is worth one pizza in this example. So Richard saves 15 minutes by doing his best task. It would take John 2 hours to make the 6 lamps, but that is not relevant for Richard as long as he gets the lamps he needs.

What about John? If John wants pizza he could make them himself, but that would not be the best use of his time. He is able to make 2 pizzas per hour but in the same amount of time he could make 3 lamps. So if John wants 4 pizzas, his best choice is to make 4 lamps and trade them. The lamp-making would take 4/3 hours = 1h 20 minutes, whereas making the 4 pizzas would take him 2 hours. So effectively he saved 40 minutes by doing his comparative advantage.

Those simple calculations show that the theory is sound, at least in theory. It is most profitable, both individually and collectively, that each perform the task that they are best at.

Following this theory, I should not repair my bike myself. It would be better for me to spend my time doing software development and use the money earned to pay a mechanic to do the job for me.

My comparative advantage is programming because I can create more value by programming, than I can as a mechanic.

This is the reason that I should not repair my bike myself - at least according to theory.

Specialization has other advantages as well. A professional bike repairman has better tools and more skills, so he or she should be able to replace my bike chain in 5 minutes where I might struggle and swear as much as 15 minutes. This difference in efficiency between me as a tinkerer and a professional mechanic becomes a multiplier for the argument of specialization.

But let's look at some considerations that make the theory break down.

I already have the skills and tools to change the cain, sprocket and brake-pads myself that I acquired during my student years. We must factor in the total time of getting the repair professionally. Not just the 4 minutes the mechanic uses. We need time to book an appointment and spend time on transport to and from the repair shop. Either I would have to wait to get it fixed or I would have to come back a 2nd time to pick up the fixed bike. Because of additional overhead, the total time for me would longer if I use a professional mechanic than if I do it by myself I am taxed on the money that I would have used to pay the repair shop, and they pay tax as well, but there is no tax on the work I do for myself. Taxations level out and diminishes the comparative advantage of the mechanic. The repair shop is streamlined in performing the repair. A professional is able to do my 20-minute job in 5 minutes. But they have overhead that I don’t have. They need extra time for managing the task - Which bike belongs to whom, a queue of jobs, customer service, charging money, and all the overhead with running a business.

We don’t pay tax on the work we do for ourselves. But if we do taxable work for others, then the theory of comparative advantage kicks in. It only makes sense for me to repair my own bike. It is nonsense for me to repair bikes for other people and charge money for it. Then I should instead boot up my computer

Bottom line. If you have the skill to do a job for yourself, you should do it.

It is a loss for society that a heart surgeon in many cases would be better off by doing his own chores. Economically it can make sense for a surgeon to reduce working hours in order to get time to paint his own house. A win for the surgeon, but a loss for society who gets less life saving surgery.

Life is not only numbers and economics. Some of us might appreciate the variety of doing a bigger range of tasks for ourselves instead of being hyper specialized, while others thrive when they get to do what they do the best. We are free to choose.

The nagging question - should your own chores, like cleaning the house, or work extra to pay a cleaning company to do the job for you? The answer is. It depends. For normal people in normal jobs who have comparable salaries to craftspeople in most cases they have to work longer to pay for a professional job than to do it themselves. There is tax and overhead on professional services, but no tax on work you do for yourself.

But perhaps you like to enjoy a bit of luxury, or enjoy your salaried work much more than cleaning. Then by all means indulge in this luxury. You might need to work 2 hours to make the net income to pay the cleaner for 1 hour. It is up to you which task you prefer.